ROUNDUP: What Analysts Think Of The Greek Deal
February 21, 2012
By Alexandra Fletcher
LONDON (Dow Jones)--As euro-zone finance ministers reached an ambitious EUR130 billion rescue deal for Greece after a marathon 12-hour discussion which ended early Tuesday, many bank analysts are cautious about the outlook for the beleaguered country and that of the region's currency, the euro.
Here's a round up of what they think, roughly ordered from the most positive views to the most pessimistic:
HSBC: The end of the process has been reached and it blows away all those conspiracy theories about a Greek default and/or a euro-zone break up. While the news isn't necessarily a reason to buy the euro, it certainly isn't a reason to sell it either. It will be interesting to see the U.S. reaction later. A key level to break today would be $1.3320. What the euro bears will be worrying about now is implementation risk, but overall this is a win for the bulls.
BARCLAYS CAPITAL: So many hurdles remain. The focus will now be on the implementation of the private-sector involvement and the participation rate which, if not enough, could lead to a credit event. The details of the deal will be resolved over the next few weeks and an orderly Greek default cannot be completely ruled out. Watch euro-area yields for signs of whether investors think the problems are contained in Greece, and expect the 100-day moving average of $1.3310 to hold for the euro for now.
CITIGROUP: The majority of the good news does seem already priced in as the outcome was pretty much discussed last week. The euro's reaction so far could be little more than short covering but there's a decent chance the market will continue its joy into U.S. open. However, there are uncertainties remaining with respect to implementation and how it will play out.
CREDIT AGRICOLE: Suspects the deal has been priced in and room for further euro appreciation is set to be limited in the short term. It is cautious of buying into the euro rally at current levels and doubts that it has room to rally further. Given the euro-zone economy is sliding into recession, the relative rise in U.S. bond yields compared with bunds will create headwinds to any further euro appreciation.
CREDIT SUISSE: Market response has been pretty muted following a 0.8% rally in Asian hours. Caution is warranted on the euro's direction as focus will likely quickly shift to the PSI process and the likely need for a non-voluntary participation.
ING: It looks like a deal, it walks like a deal, it almost is a deal, but the crisis marathon is not over yet. While Greece should be saved, at least for the next couple of months, the feeling of relief is not likely to last for long. So far, the return of economic growth in Greece is largely based on the principle of wishful thinking. The combination of more austerity, social unrest and European impatience could become explosive, with a high risk that the Greek crisis could still derail.
MORGAN STANLEY: Last night's agreement was in line with what the market expected. Given that the agreement was priced in by the market, the euro is likely to start running out of steam. There are the implementation risks to worry about and also the political situation in Greece in the run up to the elections. Key euro levels to break today would be the 100-day moving average of $1.3310. It would have to break through that for the euro to recover but again but it's unlikely.
RABOBANK: Agreement between creditors and the Greek government, as important as it is, is an early step in the entire process of bringing Greece's public finances onto a sustainable footing. Implementation of the agreed measures by the Greek government will likely hit periodic hurdles along the way, just as the first support package has, as payments have become due. A break of $1.33 in the euro is crucial if the euro is going to rally. Look to the European bond markets for further judgement in the merits of the agreement.
BNY MELLON: Greece now faces an austerity programme that will not only very likely exacerbate an already severe recession but may very well still leave it requiring an additional bailout in the years ahead. This point will no doubt not be lost on politicians from [the] New Democracy and PASOK [parties] as they watch their ratings slump and voters turn to the anti-bailout leftist parties ahead of the April election. This, and the fact that there is a risk that Greece may not be able to return to the markets at any point in the foreseeable future will also weigh heavily on the thoughts of Dutch, German and Finnish politicians in the weeks ahead.
CAPITAL ECONOMICS: In all, if no new hurdles arise (a big if), the latest deal should prevent a disorderly Greek default on 20th March when EUR14.4 billion of debt matures. But with the recession thwarting debt reduction efforts and public outrage growing, we still see Greece leaving the euro zone before the year is out.
-By Alexandra Fletcher, Dow Jones Newswires; 44 20 7842 9462;
[email protected]; @djfxtrader
I prezzi ci dicono stamane che per quanto riguarda il retail l'accordo di ieri non chiarisce niente, nè in un senso nè nell'altro:
